Interfacing IS governance with corporate governance
What is corporate governance?
When discussing corporate governance, Cadbury (1999) states that, “Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals…the aim is to align as nearly as possible the interests of individuals, corporations and society”. Various literature is available on the subject, one such is the King report 2002 on corporate governance which has institutionalized corporate governance in South Africa. Corporate governance as stated by the King committee on corporate governance (2002) suggests several characteristics embodying this type of governance. These characteristics are outlined below:
Discipline – The commitment made by top management towards adhering to behavior and practices that are universally recognized and accepted to be correct and proper.
Transparency – Outsiders must be able to draw conclusion/analysis with ease of all the companies operations. This encapsulates all activities related to the economics and other non-economical attributes of the company. The company must be able to provide relevant information, as and when is required. Transparency is required for investors to make informed decisions.
Independence – This outlines the extent to which mechanisms have been put to control, minimize and avoid conflicts of interests which may occur. All business decisions, such as board appointments must not allow for undue influence, and preserve independence.
Accountability – Decision makers within the business, must be held accountable for their decisions. Correct measures must be in place, which may be utilized by investors i.e. for assessment purposes.
Responsibility – Mechanisms must be in place, to address incorrect behavior, such as mismanagement. Senior management must be guided by mechanisms to act appropriately should such arise. Management must act responsibly to ensure that the business doesn’t derail, in good faith and in the best interests of the company, and its shareholders.
Fairness – All systems/mechanisms existing within the company must be balanced and fair. This may amount to equal treatment between minority and majority shareholders.
Social Responsibility – Companies must be aware of social issues, and must priorities ethics. Companies must consider the environmental factors, as well as the human rights issues, and identify them as priority. Responding to these factors will indirectly benefit the company, such as an increased corporate reputation. The King committee on corporate governance (2002), continues to state that corporate governance, is about leadership. This is identified in the need for efficiency, probity, responsibility, transparency and accountability. The latter is of utmost importance, as without it, business leaders cannot be trusted which will result in the decline of the company. What is Information System (IS) Governance?
IS governance as stated by KPMG (2008), is not a one size fits all approach. There are multiple factors which must be considered and impact on implementation, such as regulations, corporate culture etc of the organization. In understanding the context, the external factors such as industry regulations amongst others, need to be looked at, so as to locate the company’s overall IS strategy. IS governance seeks much to do with the generally accepted practices and is manifested within the Control Objectives for Information and Related Technology (CoBiT), IT Infrastructure Library (ITIL) and ISO 27001 amongst others. These governance strategies and frameworks are all geared towards promoting a quality approach to achieving business effectiveness and efficiency through the use of information systems. The link between Corporate Governance and Information Systems Governance Corporate governance has been outlined above, as the responsibility of the Board of Directors of a company. IS...
References: Cadbury, A. 1999. Corporate Governance Overview, World Bank Report
Heathfield, S.M. 2011 http://humanresources.about.com/od/glossaryc/g/ceo_title.htm
Southgate, D, 2002. CEO-CIO relationships improving but nowhere near perfect
IDC Governments Insight (2011), United States Government IT Infrastructure Strategies http://www.idc-gi.com/getdoc.jsp?containerId=IDC_P15372
Feeny, D.F, Edwards B.R, Simpson, M.K 1992. Understanding the CEO/CIO Relationship
Chun, M. Mooney, J 2007. CIO roles and responsibilities: Twenty-five years of evolution and change
KPMG, 2011. IT Advisory, IS governance services
KING COMMITTEE ON CORPORATE GOVERNANCE. 2002
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